Real Estate Alliance

What are Con acre lettings and long term leasing

What are Con acre lettings and long term leasing

A con acre lettings is defined as a licence, that is a letting for a term under 11 months.  This is a throw back from the old landlord and tenant days, when all lettings under 11 months system are deemed, not to be a lease, but rather a licence.  This was significant for those farmers applying for a pension under the farm retirement scheme, when it was deemed and accepted by the Department of Agricultural that short-term rents were not a lettings within the meaning of the scheme, and therefore were eligible.  In our business a good 60% of lettings are still in this category with no tax advantages. 

A lease may be defined as a letting over 11 months.  Long-term leasing has many tax advantages.  A farmer therefore who enters into the farm retirement scheme has no option but to lease his farm under a long-term arrangement, for either a 5 or 10 year period.  The farm pension is for a maximum of 10 years and the farmer must be over 55 years of age. Once a farmer hits the age of 66 and still drawing entitlements the state are entitled to deduct the old age pension out of the farm pension received.  The farmer in question must also lease his lands to a qualifying farmer, that is, a farmer who has got a Green Cert and is currently at or under 40 years of age (the age limit changes from time to time and should be checked with The Department of Agriculture).  The tax advantage with effect from the 1st of January 2006 is €12,000 per annum (Tax Free) for leases between 5 and 7 years, and from €15,000 per annum (Tax Free) for leases of 7 years or more. This tax arrangement, also applies to all categories of farmers over 40 years of age who wish to lease their land. 

Regrettably, these tax reliefs do not apply where a farmer leases his lands to a son/daughter as they are deemed not to be at arms length.

There are many advantages to long-term leasing as the lessee farms the land as if he owns it, being responsible for good husbandry, public liability, etc.  The disadvantages to long-term leasing is that the farmer looses control of the lands during this period and cannot, as in con acre lettings, decide to sell his/her property without first obtaining an agreement to do so from the tenant.  All in all, the benefits for long-term leasing are far greater than those from lettings under the old con acre system.

Incidentally I have yet to come across a lease in excess of 20 years.  The reason being that such leases in excess of this term may come within the ambit of the Landlord and Tenants Act.  This is by no means definite as it has never been challenged in the High or Supreme Courts, but do be careful.

I have however seen leases for 19 years 11 months and 30 days.

John Dawson, IAVI, Dawson Real Estate Alliance, Tullow, Co Carlow